Friday, January 22, 2016

Predictions For Wine in 2016 And A Look Back

In preparing to list predictions for the year ahead, this lazy man's approach is to recycle last year's predictions. Anything that didn't come to pass gets tagged as a prediction ahead of it's time, and anything that did, well, that's a win.

All kidding aside, looking back before looking forward is a helpful exercise in seeing a broader continuum of trend. So, as 2016 gets underway, last year's predictions get the dust off. Below are updates on those, as well as some new ideas for what lies ahead. Because this blog attempts to provide actionable advice on buying, you'll notice that many of the commentary herein centers around pricing and values. Enjoy.

Purchasing 2012s from California is about 50% less risky than buying 2011s was. I think we saw ample evidence of this. Further, I predict that, at $20 and below, purchasing 2013s and 14s is about 50% riskier than last 2012s. Not only are we in the midst of a lamentable tectonic vintage/stylistic shift, but $20 won't buy you what it did last year. For the remainder of this decade, 2012 will be seen as the last good year for wine in California,

Good things from the Rhone Valley. This was definitely true. I just wish I had taken more advantage of it because recent vintages haven't been as good as 2010-12 and pricing on Cotes du Rhones have bravely tested the $20 threshold. Fail.

Ditto for Bordeaux. 2009-10 were vintages that offered fantastic quality and value almost regardless of price. 2011-12 looks a lot less exciting and 2013 positively mediocre. The strength of the dollar will continue to wreak havoc on French exports, which are already suffering from a tremendous slump in the last ten years. I suspect these will translate to some humility in pricing, but, like California, we'll be looking back longingly on 2010 for a longtime.

Italy emerged as a gem for reasonably priced wines from lesser celebrated corners of the country. Hell yes it did. I'll double down on this for the year ahead.

Rioja suffers from oak bludgeoning, making them largely undrinkable. Despite keeping an open mind, Spanish samples received in 2015 echo this. Such a shame. Almost without exception, I have abandoned Spain as a source for red wine.

Napa continues to live in la-la land. No change there, but some of the most memorable (and, yes, expensive) reds consumed in 2015 were from Napa. That exception, however, is not enough to coax me off the sidelines into the upper echelons of pricing. I continue to look at the Napa Valley wine industry as a house of cards.

Pricing from regions gaining on Napa's notoriety are also getting braver. Last year I expected this to continue to as some regions improved quality while maintaining more modest pricing. This year my expectations are low. Pricing in California is up almost across the board as quality is on the decline. What is happening with all the higher quality grapes, I do not know.

Portugal. Most famous for Port, the sales of which are in decline, Portugal produces what could be the planet's best QPR wines. This is most exemplified by its brilliant whites. While I had hoped 2015 would be a breakthrough year for Portuguese wines in the US, the majority of the stuff arriving on shelves in the US is red and rough. What's up Portugal?

DTC (direct to consumer, or purchasing direct from wineries) double digit growth will continue to climb as buying behavior (and product availability) changes. This was definitely true: 2015 saw 15.5% growth, and 2016 numbers are projected to hit $2 billion. Wineries are investing in this highly profitable channel while the three tier system sits idle, either in denial or ignorance. It's going to take some time, but in an era where you can have a refill of your laundry detergent delivered by tapping a button on the carton, the foundation of consumer buying behavior is likely to up-end the entire model. But we're still some years away from that.

2015 will continue to see explosive growth in the craft beer market at the expense of the premium wine market. I don't have solid numbers for this, but know it to be true. What'll be interesting to see is whether we've reached a saturation point in craft beer - not that it matters. Even at its current presence, craft beer represents an ongoing threat to premium wine. This piece from a year ago explains why. See also #11.

Marijuana. Like craft beer, it'll be very interesting to see if/how this impacts the wine market. Interestingly, an industry contact recently told me that beer sales are up and wine sales are flat in Colorado since legalization. Let me know if you figure that out. Having traveled to the Rocky Mountain state in 2015, my prediction for 2016 is that legalized marijuana will expand its footprint and (beyond 2016) represent a competitive alternative to alcohol in general. More on this in an upcoming piece.

Big retail. If you want to make any money in the business of selling wine, you either have to have a carefully procured product lineup stocked with winners (which is akin to owning a crystal ball) or a move a ton of volume through a large (and expensive) inventory. We will continue to see rolling up of retail segments by large players, making it more difficult for the small independent shops to compete. So far, however, consistently delivering service of any quality remains elusive to larger players. Will consumers care? Probably not. Expect very few independents to open, some to close, and mid-sized players to get acquired.

So, to summarize:

2016 will be a year absent of reliable guidance for buying wine. It will also be a year for oddball exceptions - different grapes and unheralded regions will be better values and drinking experiences than the old guard.

France, Spain, and California bad. Italy good.

If you see any of the following, snap it up: Rhone and Bordeaux from 2010, Northern California and Washington from 2012, mid-pried Portuguese whites.

Online wine shopping will continue to grow as the traditional retail model watches the world change around it.